The biggest story of 2011 : Hyundai EON vs Maruti Alto

For a car with such a huge potential, the launch of the Hyundai was rather subdued. But does it have enough punch in it to unsettle the 6 year long hegemony of the Maruti Alto as the largest selling car in India?

A little over two years ago, the then managing director of Hyundai Motor India H S Lheem very casually remarked that the Korean carmaker was looking to go below its entry level Santro and make a car smaller and cheaper than it. The industry then and the press as well, was living in the frenzy of the Nano that had just been showcased to the world in the Delhi Auto Expo 2008 and small cars, micro ones at that, were the talk of the town. See chart

The very affable Lheem, was known to speak a little too in haste and has on various occasions proved to be a PR person’s nightmare. A couple of such instances that come to my mind was when he talked about the possibility of bringing in a diesel version of the Santro and then again when he announced the eventual phasing out plans of the Getz and Elantra at a time when it was not fully decided yet.

As such, his words of the sub Santro segment car were picked up but not given the due importance it deserved. That maybe because everybody was hooked to the Nano story and Lheem was categorical that a Nano, Hyundai would never make. Feels like deja vu then as the launch of the Eon was as casual as the first utterence of its development.

Today, the Nano resembles more like a ghost of what it could have been. Against an anticipated production of 250,000 units per annum, it is struggling to even churn up a third of that number. The Eon though, despite the trappings of a lack of ambition and a higher price tag, almost looks like a winner.

The sub Santro, Rs 2-3.3 lakh segment has few players right now, namely the entire Alto/Alto K10 range, most of the Santro range and parts of the Spark. The cars in this segment are priced more than the Maruti 800 and Tata Nano, but nevertheless, it commands almost a fifth of the entire sales in the industry.

These cars today sell more on account of dormancy of competition and low per capita consumption of the Indian public than any inherent merit. The Alto, a brand first founded in Japan in 1979, is now over 11 years old in India and the k10 notwithstanding, looks very dated. So are the Santro and Spark. The former is ironically made and sold only in India today while the latter is a repackaged version of the old Daewoo Matiz, a car that was first introduced in India in the 90s.

In the last 10 years, not one car has been launched in this segment. Many, like GM and Ford have looked at it and turned away, The price is too low and margins wafer thin. The list of features that can be given at this price is so few that increasing regulations would force the cars out of the markets sooner than later. Further, even if a manufacturer manages to make a car at this price, the potential for exports would be negligible. Not worth a shout for global carmakers like GM, Ford or even an India centric Suzuki.

Even then, the growth of the Alto in India showed that this segment would continue to offer volumes and would hold steady. The Alto continues to be a nicely packaged, frugal, commuter car. But in reality, it is a success only because nobody else can match it for the price. Not anymore.

Eon has managed to scare Maruti in a way that people expected Nano would do. For the first time in over a year, Maruti launched a cosmetically modified version of the Alto in a bid to make it look more contemporary as also create some noise to disipate the din surrounding the Hyundai car.

The Eon feels and looks modern and makes competition look pale in comparison. The fit and finish and quality of plastic is very good for its class and though it is not that bigger than rivals, it looks bigger, Infact from the front, it looks like a miniature version of the i10. Maruti knows very well, Eon is a better car than the Alto.

It is not without its flaws and as it is, perfection can hardly be expected with a car that costs so less. Its rear seats are cramped and the windows are so small that one would feel claustrophobic. It also suffers from some spooky pricing strategy that has led to features like AC and power steering being traded at the altar of the price. A car may look upmarket by how it feels and drives but lack of features more than nullifies that feeling.

But the biggest challenge for Hyundai would be whether it can rouse itself out of its feeling of pessimism and inject some enthusiasm and ambition into the Eon story? With this car, for perhaps only the second time, there is a chance that Maruti could be dealt a body blow. The first time, it happened with the Santro. It is not a surprise then, that Maruti is not taking Eon casually.